Advantages and Disadvantages of Traditional Economy

Vinish ParikhMarch 2, 2010

Traditional economy can be defined as an economy which is based on customs and beliefs which people get from generation to generation. In simple words it is the economic system in which resources are allocated by inheritance. Traditional economy has some advantages as well as disadvantages here are some of them.

The main advantage of traditional economy is that this type of economics produces only those goods and services which are required for the survival or which they want to consume. Hence there is no surplus or wastage and hence it does not waste resources for goods and services which are unnecessary. Also in this economy people know exactly what their roles or job is and hence there is no duplication of effort.

However it suffers from certain disadvantages like this type of economy resist any changes because they tend to think that methods and procedures which are followed by their ancestors for generations are correct and hence which in turn leads to lower productivity thus leading to lower development of the society or country as a whole. Also due to this lower productivity people have lower standard of living than other economies which does not follow traditional economics. Also in this type of economies people have to do job which they are told to do but which they don’t like and hence it also lowers their productivity.